Do Not Call List Tops 200 Million, Some Scammers Still Ignore It

Before the ban, telemarketers portrayed their calls as Constitutionally protected 'unpopular' free speech.

The Federal Trade Commission announced a milestone this week: its Do Not Call registry has just passed 200 million numbers.

It’s quite amazing that any of this came to pass, really. When the registry was being considered back in 2002, telemarketing opposition was fierce, and for obvious reasons. The industry was large, powerful, and willing to be unbelievably annoying. It also saw quite clearly that a tough Do Not Call rule would chop off its business at the knees.

So, when the time came to object to the rules being drafted, every card was played: First Amendment rights, the jobs that telemarketing offered to “patriotic” Americans, and dire warnings about “unintended consequences” and regulatory overreach. In fact, it was argued, telemarketers were really an unpopular minority whose rights were being trampled.

“First, let’s be honest here,” said one telemarketing executive at a 2002 FTC meeting in which the registry was being considered (read the transcript [PDF]). “This is a proposal not to regulate but to prohibit speech, not because it’s deceptive or abusive, but because it’s unpopular. As was said here, there is public sentiment against telemarketing, per se. Some people are mad. Some people are fed up. Some people just hate such calls, but freedom of speech, our most cherished freedom, means the freedom to speak when it’s against public sentiment.”

For good measure, the same speaker later switched gears and praised the millions of people employed in telemarketing (many part-time), saying that “the overwhelming number who are employed in this business are lawful, patriotic and normal Americans, and for the Government to cut out a series of these jobs is a very serious matter.”

These Americans might have been “normal” and “patriotic,” but the rest of the country just wanted to eat in peace. Testimony at the same hearing from one aggrieved mother conjured up the specter of those dark days, back before the federal list existed and rules governing telemarketing were loose. (One could ask companies not to call again, but that was about it.)

It all began with some calls about vinyl siding.

My name’s Diana Mey. I’m a housewife and stay-at-home mom. I have three teenaged sons. I live in Wheeling, West Virginia. Telemarketing impacted me about two years ago when I had, as I said, three sons and we were running in a bunch of different directions, and I was wanting to get us all together at one time to have dinner together at night, and I found that with increasing frequency our dinners were being interrupted by telemarketing calls, and I heard about the law that regulated telemarketing, and I thought this would be a way that I could — I didn’t want to be rude, but I thought the law would be my best answer.

So, I tried to enforce the law, asking companies to not call me back, and over a period of about six months, I had a telemarketer for Sears call me repeatedly over and over despite my request to stop calling. To make a long story short, I filed a small claims suit after writing to the company, and they continued to call. In fact, the last call they placed to my home, I grabbed a tape recorder and I taped it and I wrote the company, I told them, I said, look, you know, you keep calling, I can prove it, I’ve got the proof.

I filed a small claims suit, and the next thing I knew, Sears’ lawyers turned around and countersued me for $10,000 saying I violated state and federal wiretap statutes — and by the way, it is legal in my state to tape my own calls. They also threatened punitive damages.

I was very afraid. I ended up having to get a lawyer, got the dispute dismissed.

Mey’s story landed her on national TV (Matt Lauer interviewed her on the Today Show, for instance) and Sears eventually flew someone to her town to apologize to Mey in person. According to her website, where she later kept up the fight against telemarketers, Mey was paid $4,000 by Sears, some of it in the form of gift cards. As she told the FTC, when her husband used the cards to buy an air compressor at Sears… the company started calling again.

“The jig is up”

The telemarketing industry wasn’t opposed to the idea of one national list; indeed, some execs complained publicly about the cost of keeping up with all sorts of private and state-run lists, so a single list would be easier to manage. But the industry wanted lenient rules about pre-existing business relationships and the percentage of computer-dialed sales calls that could be “abandoned” when no operator was available.

Instead, in late 2002 the FTC adopted a tough rule, including a national Do Not Call list and a three percent “abandonment” rate on auto-dialed calls. Initially, the list would only last for a few years before a renewal was required, but the list became so politically popular that it was later changed to last indefinitely.

The Direct Marketing Association filed a lawsuit. So did the American Teleservices Association. Both complained, in the words of a Congressional Research Service report (PDF), that “the FTC’s rule infringes on the telemarketers’ rights under the First Amendment and violates the Equal Protection Clause of the United States Constitution. The plaintiffs also argue that the FTC exceeded its statutory authority in promulgating regulations establishing a national do-not-call registry and acted in an arbitrary and capricious manner in so doing.”

Eventually, though, the industry admitted defeat. In a 2004 article in Direct, a trade journal, the author admitted that the “jig is up,” but she blamed the new rules on marketers who had insisted on “doing what we never should have done in the first place.”

Instead of carefully targeting customers, using experienced sales reps who knew their products, and treating people with respect, the industry blanketed US phone lines, used predictive dialers that abandoned huge numbers of calls, and relied on ridiculous and stilted sales “scripts” for operators who had no idea what they were selling but could manage to read from a screen.

Today, 200 million numbers are on the US Do Not Call list, and the government has generally forbidden all telemarketing calls to cell phones. Taken together, these two rules fundamentally changed the telemarketing business.

Back in 2002, some marketers complained that, without their helpful calls, consumers would pay more for things like credit cards. Even if true, no one seems to be complaining.

Since the list went into effect, the FTC has gone after more than 60 companies alleged to have violated the law. Most recently, in May 2010, it targeted three companies that were robocalling consumers with “urgent-sounding messages from ‘Card Services’ or ‘Financial Services,’ stating that consumers needed to ‘press one’ to speak to a representative about their credit card interest rates. Many consumers believed the calls were from their credit card issuers.”

In reality, the calls were from some companies who thought it would be a nice business to charge in-debt consumers $500 to $1,500 in return for bringing down the interest rate on their credit cards. When the people paid up, the companies “sent consumers instructions to pay down their credit card debts early, thus saving money on interest. Consumers who complained and demanded refunds allegedly were denied outright, got the run-around, or had a $199 ‘nonrefundable fee’ deducted from their refund.”

A federal judge finally put the three businesses into receivership and froze the assets of their owners.

Ah, telemarketing!

Now, if only the FTC’s anti-spam crusade was anywhere near as effective as its telemarketing regulation.